The merger of the asset management divisions of UBS and Credit Suisse has encountered integration hurdles as the combined entity caters for pension funds and other institutional investors.
One of the most delicate exercises on the path to full integration, following the emergency takeover last March of Credit Suisse by UBS, is currently underway for mutual funds and segregated mandates for professional investors such as pension funds and insurance companies, according to a report in the Handelszeitung newspaper.
The two firms are dealing with “duplications”, meaning the offering of products with the same investment universe.
UBS can merge or rename mutual funds with a comparable investment universe, “but that doesn’t work with mandates for institutional clients”, a bank manager told the newspaper.
A pension fund does not simply buy a fund from an asset manager, but rather agrees on the investment process in detail. If there are any changes to these mandates, for example for fund management, the pension fund will have to put the contract out for tender again, with the risk of UBS losing the mandate, according to the report.
If, on the other hand, UBS keeps all fund managers in-house not to risk losing mandates, it misses out on an opportunity to reduce costs.
“You are faced with a conflict of objectives here. If I decisively reduce costs, I will lose turnover. If I protect the turnover, I will remain stuck with high costs,” added a manager at a UBS competitor.
Earlier this year, the Swiss fund management companies of UBS and Credit Suisse – UBS Fund Management AG and CS Funds AG – merged.
In September, UBS announced the completion of the combination of the Swiss asset management legal entities, Credit Suisse Asset Management (Schweiz) AG with UBS Asset Management Switzerland AG.
Total invested assets of the combined asset management business, globally, at the end of the second quarter of this year amounted to $1.7trn, including $682bn invested assets in Switzerland, a UBS spokesperson told IPE. UBS came in 11th place in the IPE Top 500 Asset Managers 2024 with €1.49trn for year-end 2023.
UBS intends to keep the majority of Credit Suisse’s funds, rename them, and 80% of this cleanup work is expected to be completed by the end of the year, according to the report.
The investment process is also already integrated. UBS has so far only laid off a small number of fund managers as part of the integration, the report added.
Meanwhile, following UBS’s takeover of Credit Suisse, the hierarchy of the largest asset management companies operating in Switzerland has changed.
Credit Suisse has obviously disappeared from the ranking, but Amundi has entered the top 10 with a 1.3% share of the Swiss fund market, according to asset management association AMAS. UBS has now 36.3% of the market share worth CHF1.56trn, followed by Swisscanto with 10.6%, and BlackRock with 8.7%, it added.
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